U.S. April CPI Report Incoming – A Major Test of Trump’s Tariff Impact

TradingKey – At 8:30 a.m. ET on Monday, May 13, the U.S. will release its April Consumer Price Index (CPI) report, widely seen as the first key indicator to reflect the inflationary impact of President Trump’s new tariffs and the escalating trade war.

Economists forecast that the U.S. CPI will rise 2.4% year-on-year in April, unchanged from March, while the month-over-month increase is expected at 0.3%, rebounding from a previous decline of 0.1%.

Core CPI, which excludes volatile food and energy prices, is projected to rise 2.8% year-over-year, also matching March's reading, with a 0.3% monthly gain, up from 0.1% previously.

Analysts believe this report could offer the first glimpse into how Trump’s new tariff measures, implemented in April, are affecting inflation and the broader economy. However, some experts caution that the immediate impact may be limited.

Many U.S. importers rushed to stockpile goods before the tariffs took effect, which could have delayed or diluted the cost-pass-through to consumers. Moreover, the full inflationary effect of tariffs typically takes several months to fully materialize.

Bank of America economists noted that this could be the first report showing early signs of tariff-driven inflation, but the impact is likely to be concentrated in specific sectors, particularly the automotive industry, rather than broad-based across the economy.

Meanwhile, the May 12 U.S.-China trade thaw — marked by a joint agreement to temporarily slash tariffs — has prompted markets to reassess the potential long-term economic and monetary policy implications of the tariff battle.

Traders have already scaled back expectations for Federal Reserve rate cuts this year, from three projected cuts to two, while Goldman Sachs pushed late its forecast for the next cut from July to December.